Climate, Development, Energy,
and Finance
Tariq Banuri
Stockholm Environment Institute
Alternative Approaches
• The Climate Community: Aim for a
comprehensive solution
– Start with emission goals and work backwards
• Development: Protect development momentum
– Start with development goals, and identify options,
both domestic and international
• Finance: Start with available financing
– Alternative instruments: CDM (scale, structure),
Carbon Tax, Clean energy financing
– Start with available financing and work forwards
• Is there a fourth possibility?
The Climate Community
Emission Trajectories for 450 ppm
80% global reductions by 2050
What’s left
for the South?
90% by 2050
in the North
What kind of climate regime can make this possible?
An Alternative Conception
Implications
• Targets are essential for both North and
South
• Economic instruments will work only if
targets are realistic
• Conceptions are often developmentblind and financing-blind
The Development Community
Source: UN/DESA, WESS
2006
Emissions and Income
Carbon Emissions/Capita (tons)
14.00
Qatar
12.00
10.00
United Arab
Emirates
8.00
Luxembourg
Bahrain
6.00
Singapore
United States
Australia
4.00
Norway
Canada
Saudi Arabia
Czech Republic
Japan
2.00
Switzerland
Hong Kong, China
0.00
0
5,000
10,000
15,000
20,000
GDP/Capita (PPP$)
Source: World Bank (1998); Marland, et al. (1998).
25,000
30,000
35,000
The Five Development Crises
1. Traditional development and MDGs
–
Solution: conventional financial flows
2. The impact of climate change
–
Solution: Financial and support for adaptation
3. Impact of OECD climate policies (e.g., carbon tax)
–
Solution: Policy coherence in North
4. Impact of own climate policies (especially energy)
–
Solution: New and additional resources for mitigation and
adaptation
5. The growth conundrum: Has the age of growth come to
an end?
Energy is a Basic Human Need
• Main difference between rich and poor countries
• Strongly correlated with HD indicators
• Developing countries must expand electricity and
transport infrastructure three to four times just to
reach basic needs goals
• Expansion is constrained not by demand (efficiency,
population) but by supply (investment capacity).
• Over 75% emissions from the energy sector
• Projected developing country energy growth (3 to
5%) means more emissions despite rising energy
efficiency.
Developing Country Energy Deficit
Energy Consumption per capita
2000
2005
2030
OECD
~5.1
~5.6
~6.9
EIT
~1.0
~1.1
~1.8
Developing
Countries
~3.6
4.7
~9
World
~9.7
11.4
17.7
The Development Finance
Community
Policy Instruments
• The Carbon Market and CDM
– However, there are implicit assumptions:
pilot scale will give rise to cost reduction
and voluntary action
– Can it respond to conceptions of climate
and development communities, e.g.,
through larger commitments by Annex I?
• Carbon Tax
– However, impact through energy prices on
developing countries
– Dual pricing and institutions
Scenarios: Path Dependency of Crises
• The post-Manhattan: Dedicated and timely global public
investment in mitigation as well as building capacity for
adaptation. Worst outcomes are avoided. By the time the issue
begins to bite, costs come down for both north and south.
Financing remains an issue, but not the dominant one
• The post-Titanic: Mitigation delayed, impacts begin to emerge.
Major climate impacts on North lead to anxiety, and public
pressure for action on climate. High support for mitigation, but
this leads to slowdown of OECD growth rate, and weakening of
public support for adaptation funding or development aid
• The post-Tsunami: North is relatively unaffected. Climate
impacts in South lead to strong charitable contributions for
rehabilitation and compensation.
An Integrated Perspective
The Case for CDGs
• From action to finance, and action to
policy
• Build a global consensus on goals
• Integrate climate and development
– Enhance coordination between different
actors
– Enable more effective monitoring the
relation between challenge and response
– Give clear signals to private sector
UN’s Role in MDGs
• Convening power to build consensus on
the goals, i.e., Millennium Declaration.
• Translate the visionary agenda into
practical goals and indicators of
progress
• Mobilize expertise to design an action
program to achieve the goals
• Continue to monitor goals
Illustrative CDGs
1. Ensure equitable access to Modern Energy Services
while reducing greenhouse gas emissions
2. Shift to sustainable, efficient, and equitably distributed
Transport services
3. Ensure Food security through sustainable land use
management, and sustainable water use
4. Ensure adequate and well targeted financing
5. Support technology development and cooperation
6. Ensure sustained improvements in human health
7. Enable critical ecosystems to adapt naturally
8. Ensure effective disaster management
CDG1: Energy
• Coverage: Universal coverage by 2030,
or convergence in per capita availability
between North and South
• Access and equity: stable pricing fixed
in relation to per capita income
• Portfolio: Fix share of renewables
• Efficiency: National targets
CDG4: Finance
• Win-win options: Reserved for domestic
financing
• International targets based on income,
capacity, and responsibility
• Separate targets on conventional ODA
(plus MDGs), mitigation, and adaptation
• Planning and Policy Making: Support for
plan development